While you were sleeping: Caterpillar, 3M rally on outlook

The logo for Caterpillar appears above a trading post on the floor of the New York Stock Exchange yesterday. Photo / AP

Wall Street climbed as stronger-than-expected corporate earnings including from Caterpillar and 3M sent the Dow to a record high, bolstering optimism about the outlook.

"For the most part, I think, you'll see earnings continue to come in good-and not just earnings, but increases in revenue that look stronger than expected," Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, told Bloomberg.

"The economy is doing great here domestically, the whole world economy is certainly improving, and we're optimistic that the market is going to continue to go higher because it is earnings-driven."

In 2.28pm trading in New York, the Dow Jones Industrial Average climbed 0.9 per cent, while the Nasdaq Composite Index gained 0.4 per cent. In 2.13pm trading, the Standard & Poor's 500 Index added 0.2 per cent.

The Dow touched a record high 23,485.25.

US Treasuries fell, pushing yields on the 10-year note four basis points higher to 2.41 per cent, the highest in more than five months, according to Bloomberg.

The Dow rose as rallies in shares of 3M and those of Caterpillar, recently up 7.2 per cent and 4.8 per cent respectively, outweighed declines in shares of IBM and those of General Electric, recently down 2.3 per cent and 2.1 per cent respectively.

Shares of 3M jumped after the company bettered quarterly earnings estimates and lifted its full-year outlook.

"Coming off a strong first half, our team delivered an even more robust performance in the third quarter," Inge Thulin, 3M's chief executive officerm said in a statement.

Analysts agreed.

"3M seems to be executing on pretty much everything we can measure," Scott Davis, an analyst with Melius Research, said in a note, according to Bloomberg.

Shares of Caterpillar rallied after the maker of heavy equipment also posted quarterly earnings that exceeded expectations and upgraded its full-year outlook.

"Higher sales volume and our team's focus on cost discipline resulted in improved profit margins across our three primary segments," Caterpillar CEO Jim Umpleby said in a statement.

Caterpillar continues to see strength in a number of industries and regions, including construction in China, on-shore oil and gas in North America, and increased capital investments by mining customers, according to the statement.

"We are working with our supply chain to increase production levels to satisfy customer demand for those markets that have improved," the company noted.

Also bettering estimates, McDonald's shares rose after the fast-food restaurant chain reported domestic same-store sales rose 4.1 per cent in the third quarter, while global same-store sales increased 6 per cent, the company said in a statement. Both exceeded analysts' estimates.

"We are serving more customers, more often," McDonald's Chief Executive Officer Steve Easterbrook said in a statement. "Our positive comparable sales and guest counts across all of our operating segments during the third quarter demonstrate broad-based momentum throughout our business that builds upon our strong first half of 2017."

Shares of McDonald's traded 0.9 per cent higher as 1.26pm in New York.

"Given that the fast food and casual dining segments as a whole struggled over the third quarter, this is an encouraging set of results which suggests McDonald's is gaining both market and customer share," GlobalData Retail's managing director Neil Saunders told Reuters.

In Europe, the Stoxx 600 Index ended the day with a 0.4 per cent decline from the previous close. The UK's FTSE 100 Index eked out a 0.03 per cent increase, while Germany's DAX Index rose 0.1 per cent and France's CAC 40 Index advanced 0.2 per cent.